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Firm Value and Cross Listings: The Impact of Stock Market Prestige

Federal Reserve Bank of New York, 33 Liberty Street, Main 3, New York, NY 10045, USA
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Academic Editor: Christian Brownlees
J. Risk Financial Manag. 2015, 8(1), 150-180; https://doi.org/10.3390/jrfm8010150
Received: 27 October 2014 / Revised: 26 February 2015 / Accepted: 9 March 2015 / Published: 23 March 2015
(This article belongs to the Special Issue Econometric Analysis of Networks)
This study investigates the valuation impact of a firm’s decision to cross list on a more (or less) prestigious stock exchange relative to its own domestic market. We use a network analysis methodology to derive broad market-based measures of prestige for 45 country or regional stock exchange destinations between 1990 and 2006. We find that firms cross listing in a more prestigious market enjoy significant valuation gains over the five-year period following the listing. In contrast, firms cross listing in less prestigious markets experience a significant valuation discount over this post-listing period. The reputation of the cross-border listing destinations is therefore a useful signal of firm value going forward. Our findings are consistent with the view that cross listing in a prestigious market enhances firm visibility, strengthens corporate governance, and lowers informational frictions and capital costs. View Full-Text
Keywords: cross-listings; network analysis cross-listings; network analysis
MDPI and ACS Style

Cetorelli, N.; Peristiani, S. Firm Value and Cross Listings: The Impact of Stock Market Prestige. J. Risk Financial Manag. 2015, 8, 150-180.

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